McDonald’s caught in fast-food frenzy

NEW YORK — McDonald’s is mixing up its menu with healthier, fresher sounding items such as its chicken McWraps, but not enough customers are biting.

The world’s biggest hamburger chain on Monday said July sales are expected to be relatively flat and warned of a tough year ahead, given the heightened competition and rough economic conditions around the world.

“We don’t have as much pricing power,” said CEO Don Thompson, noting that the company wouldn’t be able to easily charge more for its food without the risk of scaring off customers.

The company, which has more than 34,000 locations worldwide, says global sales edged up 1 percent at restaurants open at least a year.

The figure rose by the same amount in the U.S., where McDonald’s is touting its Dollar Menu while also trying to adapt to changing eating habits with items such as its veggie-filled chicken wraps and egg-white breakfast sandwiches.

The small sales bump in the U.S. wasn’t enough to offset the higher advertising and promotional costs for those new items, as well as the reduced efficiency in restaurants. Its operating margins has declined slightly as a result.

“We threw a lot of new products at restaurants this quarter,” Chief Financial Officer Pete Bensen said in a call with analysts. “So our efficiency per crew hour was down a little bit.”

The tepid sales growth for the quarter ended June 30 reflects the challenges facing McDonald’s Corp., which for years had been a standout in the fast-food industry.

Part of the problem is that economic conditions remain weak in many regions of the world, with the company repeatedly noting that people are being more careful about eating out.

Another challenge for McDonald’s is the growing number of chains that offer quick food at higher prices, including Chipotle, Noodles & Company, Panera Bread and others.

Traditional fast-food chains have taken note and are scrambling to keep pace. Wendy’s, which reports its results today, is in the process of renovating its restaurants to be more inviting and modern. Its new burgers are positioned as premium, and the chain has been making tweaks such as introducing natural-cut French fries and softening the edges of its famously square burgers so they don’t look so processed.